When it comes to making the right purchase, modern day consumers are savvy. We don’t just look at a car’s shiny paint job or its great interior, we take the time to look under the hood. But do the same rules apply when we’re buying a property, and how do we know what to look for?
The way to ‘look under the hood’ of a property purchase is to examine the contract of sale. In particular, we’re going to explore the “Special Conditions”, and how they can impact your property purchase.
What Are Special Conditions in a Contract?
Vendors generally prepare contracts for the sale of land in Victoria, and they (or their conveyancers or lawyers) often add Special Conditions to their contract.
Special Conditions add to or overwrite the General Conditions of the contract that have been set down by Parliament. Many of these Special Conditions “improve” a contract, but only from the vendor’s point of view. Let’s take a look at some unreasonable and oppressive conditions that you shouldn’t accept in a contract.
Penalty Interest Rate Increase
Some vendors will seek to raise the rate of penalty interest above the prescribed rate (currently 11.5%). This rate is more than high enough, and there’s no justification for it being increased.
Reasonably foreseeable losses
Another Special Condition that is sometimes added by vendors relates is an attempt to predefine their “reasonably foreseeable losses” in the event that you breach the contract. This special condition should be deleted, as there’s no reason why you would want to admit such things in advance.
Bumping Up the Bank Cheques
Some vendors will try to increase the number of bank cheques that you have to pay fees on. The number prescribed in the General Conditions is 3, but some vendors add a special condition to increase this to a larger number, thereby increasing your costs. There’s no reason why you should agree to this.
Don’t Pay Their Costs!
It makes sense that a vendor will want to minimise their legal costs. Vendors may insist that you pay their legal costs for either receiving a nomination, or if you have had to delay or reschedule your settlement. You should not be responsible for the Vendor’s legal costs, except when you breach the contract.
Other Contract Traps and How to Avoid Them
There are other mistakes that you might we make when it comes to the legal side of your purchase. If you’re thinking of buying property around Northcote, in Melbourne’s suburbs or elsewhere in Victoria, make sure your contract is examined by an expert before you sign it. The team at Glenferrie Conveyancing Pty Ltd are property law specialists, and we can do a comprehensive review of your proposed contract, so as to better protect your interests. To get all the legal work done for you, contact our team today!